Renting versus Owning

[steve b]

I think it depends on the value of the car that you want to race and the level at which you expect to compete. When I decided to take the leap and go to comp. school people told me it would cost $1200-$1500 to rent a car for the school. Since I was a beginner, I knew I would be content in the back of the pack for a while and the only important thing for a school is that the car passes tech.

So I went out and bought a back of the pack car for $5000. Two schools and two races and I will have recovered the cost of the car in what I would have paid in rental fees.

When you are renting something occasionally that the owner can rent out to others when you aren't renting (like specialty equipment at a rental place) renting can be cheaper. But there are only so many race weekends in any particular region, so it seems to me that the renter of a racecar is brunting the majority of the cost of operating that car. A cost that now includes the labor of the owner/crew and well as the profit for the operation.

[JeffYoung]

Guys (Lefty and Righty), I know you folks pretty well I think and have been in your position.

I'm on my third motor in 3 real seasons and one 2 race season. The first motor was stock, and lasted two race weekends before going pop. The second I blew up after I decided that I could rev to 6500 rpm, which is not the case. The third we built ourselves, installed ourselves, and keep within an acceptable rev range, and it is still way strong after a year and a half.

First motor I bought an assembled short block for $1800 and spent a ridiculous amoutn of money (perhaps $4000) to have it installed. No way that would work long term.

So, the last go round I learned how to take the motor out and put it in -- pretty easy stuff once done a few times, plus assembled the bottom end our selves. Total cost? $1000 for new pistons and that is it, plus a couple of weekends.

You can really take a chunk out of that $7k you spent on motors if you do the install and pull yourselves, and it is not that hard to build a 7 motor. Just takes time. I would think that the cost of running an IT7 car, if you build motors and put in trannies yourself is about as cheap as it gets, and a lot cheaper than renting if you are running more than 2 times a year.

[CaptainWho]

Just to throw in my two cents as the other Nut ...

In re the RX-7 engine: I'm not going to delve into the details, and I'm certainly not going to name names. The builder was extremely accommodating and we feel like they did us right. We have no qualms about working with them in the future.

In re the Baby Grand engine: That situation, as Righty mentions, is still working itself out, so I won't comment further.

But the bottom line is that stuff like that happens, especially when, like us, you don't have either the knowledge or the equipment to do much more than change the brakes and filters and install a new seat and an AFR (and had to have someone else weld the bungs into the exhaust for that).

Now, to get to the heart of the matter. First off, I do this to drive, not to work on the car. I can't speak for Righty, but I find working on the car an enormous PITA. I do the brakes and filters and stuff to save money, not because I like spending hours in the garage busting my knuckles. I find the loading, unloading, and towing to be another enormous PITA.

Time budget: I lead a busy life, filled with hobbies beyond racing, like serious amateur photography, guns, and women (I'm single). Besides, none of those are cheap hobbies, either. I have a job that requires sixty or so hours of my time each week, and more pretty regularly, on top of that. I live some distance from all of my family and many of my friends, so I spend quite a bit of time annually travelling and visiting with them. I have little interest in spending a few of work weeks worth of time a year in the garage doing something I find to be a PITA anyway.

Plus, if I got rid of the tow vehicle, the race car, the parts car, and various large parts for the race car, I'd be able to park all of my daily drivers (2) in my garage again for the first time in several years. Or turn it into a pool hall, or something.

Cash budget: Ignoring what I could net by selling the tow vehicle, my monthly expenses would drop by somewhere over $650 a month by eliminating the payment, insurance, taxes, fuel, consumables, and maintenance. In addiiton, I wouldn't have to spend $600 a year (and climbing) to store the trailer (dingblasted HOA). That'd put something like $8,500 a year back into the budget. Plus my fuel budget would go down to the tune of a couple of hundred bucks per event in towing costs.

The money's already been spent on the race cars, so that's a sunk cost; anything realized from selling them has to be considered "net", especially when factoring in the use we've gotten from them. If we sell the RX-7 and its accoutrements, we'd recover enough to fund one, maybe two events, for both of us. Maybe more if we continued the "codrive enduros to get two finishes in one" plan we've pursued so far. If we sold the Baby Grand and it's accessories, that'd be another couple or four events.

So, what I get for that investment in (formerly) free cash flow, is not having to write a big check if I ball up the car. What I lose is opportunity costs.

Even after all of this discussion, I'm still not sure where I come down on the "rent versus own" question. But those are some of the issues factoring into my thought processes.

[jjjanos]

OK... I'm an economist.

In a perfect system, and there ain't no such thing...

Cost of the car: The component of the rental car that covers the cost of the capital in the car is equal to the return you will earn on the car. (Assuming equal credit ratings). It is a wash.

Cost of consumables - brakes, the chassis and all of the big bits that wear out over time: The component of the rental cost that covers this is equal to what you should be setting aside for these items. Again, it is a wash. E.g. If a $100 frampenhanger lasts, on average, 10 weekends, then the guy renting the car is going to include the expected present discounted value of that repair in the rental - $10 ignoring the cost of money. YOU also have taken a $10 hit because your $100 frampenhanger just depreciated by 10% of its rental cost. Again, this is a wash. Renting versus owning depends on your risk tolerance. If you own, you take all of the risk that the frampenhanger won't last 10 races. You also take all of the benefit if your frampenhanger lasts more than 10 races.

Cost of parts for a crash damage or something for which you are responsible: Again a wash, excluding the cost of money AND provided that you intend to go racing again after you wad up a car. If you total an owned-car, you are out the current market price of the vehicle. If you total a rental car, you could be out replacement value.

Cost of labor: What's your time worth to you? If the rentor charges you $17/hour to prep the car, is your time worth less than that to you? If not, then rent. Otherwise, own.

Quality adjustment for the labor: Don't forget that you need to correct the hourly labor fee for both the better quality you're likely to receive AND the fact that the mechanic is likely to get it done in less time than you.

Cost of the tools/equipment you need to fix your car: I.e. Economies of scale. If you need to own the $500 yurst wrench to replace your frapenhanger, it costs you $500 just to own that tool. The rental shop, if it is working on more than one car will spread the fixed cost of that tool across ALL of the Spec Mach 5's he is supporting. Renting wins this one.

Cost of getting the thing to the track: Your truck. Your trailer. The flowers for your spouse because truck and trailer are blocking the driveway. Rent? He's still got one truck. He's got a bigger trailer. Again, economies of scale.

In short, it depends on the elasticity. (Economists just love that joke.) No, it depends on how well and how much you like working on cars. Love it? Do it well? Always wanted a Yurst wrench? Then own. Fumbled fingered? Can't tell the difference between a brake rotor and a caliper? Can't afford the florist after purchasing a $500 tool that you'll use once each season? Rent.

[seckerich]

Option #3. You already keep the car in Atlanta. Take it to OPM Autosports and pay them to prep it and do your track support. Cheaper than renting someone elses car and you already own it if you ball it up. Save all the money on the tow vehicle and trailer and still get to run a car set up just the way you like it. Seems like the best of both worlds in your situation.

[chewy8000]

I ran into this issue a couple weeks ago. My situation is slightly different in that I have my first school in Oct. and have never been on a track in a car. I raced CCS sportbikes for many years and decided to go to cars after a serious accident. Being a newbie to the club racing scene I decided and was told by veterans to buy a car if I could find one for a good price. I was going to rent but I didn't like the fact I would be driving to earn back my 4-5K if I make it through school without destroying someones car. I don't plan on it but the risk is there. I could rent a car for 2k for the 2 schools or buy one for another 2-3k and not worry about ballng it up. The rental fee is still there on top of possibly paying for the car. I have a pretty good automotive background so working on the car is not an issue either. That can make a HUGE difference in $$$$$. I also thought learning to race in my own car would be better anyway.

[CaptainWho]

OK... I'm an economist.[/b]

I'm totally on board. The difference between renting and owning for me? Cash flow. Not outlay. Flow. Move to renting versus owning, and I have more "elasticity" in when, and on what, I spend the money. ;-)

[John Herman]

Doug, as I was reading your post, I actually came to the same conclusion that Steve did. Look for a shop that will prep and rent your car back to you. Then, you always have the option of suspending the racing for awhile if something catastrophic happens.

[ITS5GB]

Steve's idea is probably the best. We have a guy here locally that has a race shop. He preps, stores and hauls for the car owner. The car owner doesn't hardly lift a finger, just drives it. The nice thing about having your own car is that it is your own car. Nobody else is sitting in it and making adjustments or changes that make you have to relearn it every time you run. Plus, you know your car will always be available when you want to use it. You decide if it needs tires, brakes, performane improvement parts, etc. And as I said before, make sure you take in to consideration what your cash flow would be if you had to write a check for a pile of scrap. Doesn't have to be your fault to total one, you just have to be there!

[Knestis]

...which brings us to exactly the business model on which Conover Motor Sports is based. And they are in Burlington, NC.

Example of economies of scale - can you say "three-car trailer?"

K

[CaptainWho]

The more you guys talk to me the more I think the "outboard support" option might be the way to go. I guess Righty and I need to check some pricing and availability information and sort out what we want to do.

[JohnRW]

The more you guys talk to me the more I think the "outboard support" option might be the way to go. I guess Righty and I need to check some pricing and availability information and sort out what we want to do.
[/b]

That's what a significant portion of SRF-land does (maybe 25%...just a guess...). They own their cars, and let a CSR or a private 'prep & transport' shop do the hauling and fixing. If all I was racing was the SRF, it would certainly be cheaper than crew diesel dually/trailer/large selection of tools/learning to do fibreglass & paint repairs/shop space. It does, however, sometimes limit your selection of venues to play, and removes some of the 'spontaneity' of deciding "Hey...screw working...I'm going to Mid-O tomorrow !!".

[shwah]

I think you guys are right on. A friend of mine campaigned a Formula Continental like this for a while, and it worked out great for him. I always recommend that beginners buy an already built car, but have after the fact realized that just because they bought it doesn't mean they can operate/maintain it. The 'prep shop' approach would be a great option for these guys.

Of course I am a wierdo that likes to stay up all night in the garage thinking about where I am going to mount the oil cooler and how that affects oil flow, air flow, hose length, likelihood of damage, wieght distribution, wieght addition, and whether I need another beer. This fact, and the fact that I was lucky enough to be friends with some racers very experienced with my car before I decided to build and race it, have allowed me to come out way ahead on the cash outlay, and to consider the cost of my time a non-issue because in reality it is entertainment for me. Before I had the race car I did the same stuff with street cars - I just like figuring out how to make cars work better.

[gran racing]

One of the nice things I like about owning is having more control over things. If something gets damaged, I decide if it needs to be replaced and/or how it is done. There have been times when I've received a love tap on the rear quarter pannel and I had a choice about how it should be addressed. I often choose the least expensive route which while may not have been ideal, it met my needs and budget. Had I been in a rental car, that option would not have been available.

I too like the idea of having someone else do some things on the car when it's either beyond my abilities, tools I have available, just simply don't want to do, or decide I'd be much better spending my time working at my part time job and letting a shop do it.

Often times people will say "work overtime or work a part-time job and let someone else do the car prep". Many people are on salary and don't have the option of working overtime. Or maybe they don't want to put in more hours at they day job. At least when a person is working on their car, it is something a bit different than what's being done in the office (typically). Time to go make my run to the junk yard.